Driver of non-oil exports of Azerbaijan - industrial zones and quarters (ANALYTICS)

Despite the negative processes in global trade, the decline in economic dynamics in the EU and the US, the reduction in exports to China, etc. the rate of non-primary exports increased by almost 18% in Azerbaijan during the first half of 2023.

Growth of production in the non-oil sector was largely supported by the activities of industrial parks and quarters that products are currently exported under the Made In Azerbaijan brand to 60 countries around the world. According to the data of the Economic Zones Development Agency (EZDA), the development of industrial clusters in the country continues at a high pace, the number of new residents is increasing, and the volume of investments in export-oriented industrial projects is growing.

According to recently published data from the Center for Analysis of Economic Reforms and Communications (CAERC), Azerbaijani non-oil exports amounted to $2 billion in January-July 2023, which is 17.8% more than the same period of the previous year. This is a very good start, giving reason to hope for the full implementation of government forecasts for non-oil exports in 2023 at the level of $3.5 billion. On the other hand, export growth indicates the competitiveness of Azerbaijani industrial and agricultural products and the presence of stable demand for them not only in the region but also abroad.

The latest significant moment for the Azerbaijani export strategy was the manifold increase in electricity supplies, since, unlike the export of raw materials, they involve various manufacturing sectors, providing a higher level of added value.

It is noteworthy that Azerbaijan owes its steadily increasing export of industrial products primarily to the effective measures of recent years aimed at developing a program for the new industrialization of Azerbaijan. This program is focused on the formation of industrial zones, industrial districts, and other specialized clusters, including the recently launched first phase of the production and logistics-free economic zone in the Alat port. In particular, according to the data of the EZDA, in recent years, 7.18 billion manats have been invested in the industrial parks and industrial quarters created in the country, of which 6.56 billion manats have already been disbursed. These steps made it possible to create 10.6 thousand new jobs. And at the next stage, the volume of investments will amount to another 690 million manats, which will also create over 5.2 thousand jobs.

The leading position among the industrial clusters created in the country is occupied by the Sumgayit Chemical Industrial Park (SCIP): the total investment in industrial facilities of 37 residents registered in the SCIP exceeds 5.3 billion manats, thanks to which over 6.4 thousand jobs have been created in the chemical park. And in the next few years, it is planned to invest another 386 million manats, creating over 2,000 new vacancies. It is noteworthy that SCIP is the leader in terms of production and export of products - 8.67 and 3.12 billion manats, respectively.

“Currently, 134 business entities are registered as residents of Azerbaijani industrial clusters, from the beginning of their activities and until August 1, 2023, a total of products worth 10.23 billion manats have been produced in industrial parks and quarters. Of this volume, products worth AZN 3.35 billion were exported, sold to 60 countries of the world under the Made In Azerbaijan brand,” the EZDA said in a statement.

This positive groundwork was maintained in the first half of this year: in the industrial zones of the country, products worth 1.4 billion manats were produced, and more than a third of the total volume of goods produced was exported. At the same time, this year, Azerbaijani and foreign businesses continue to actively explore the possibilities of the country's industrial clusters: in January 2023, 19 business entities received the status of new residents, whose investments in the creation of enterprises are estimated at 244 million manats, and this will create additional 1.5 thousand new jobs.

According to the Ministry of Economy, by 2027 Azerbaijan can count on an increase in non-oil exports to at least $5 billion, and this is quite an achievable goal, given the high pace of development of agro-industrial clusters, including in the Karabakh region. In order to increase non-oil production and exports, within the framework of the four-year "Strategy for the Socio-Economic Development of Azerbaijan until 2026", one of the main tasks is to increase the share of small and medium-sized businesses in GDP in the non-oil sector to 35%, and the employment rate in the segment of SMEs of a non-primary profile - up to 60%.

Finally, more efforts need to be made to expand the geography of supplies of non-oil products, primarily to the Chinese market, as well as the countries of the Persian Gulf, North Africa, and Eastern Europe.

Analytic group of

The article focuses on the theme of "promotion of socio-economic development of regions"

The article was published with the support of the Media Development Agency of the Republic of Azerbaijan (MEDIA)

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